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INVENTORY MANAGEMENT

In the basic fixed-order quantity model, if annual demand doubles, the effect on the Optimal Order Quantity (EOQ) is:

 it increases by about 40%
 it doubles
 decreases by a factor of 2
 it is about 70% of its previous amount
 it is half its previous amount

The goal of ABC analysis is to

 determine the profitability of items.
 estimate dollar value per pound.
 to identify the A items for better inventory control.
 estimate average volume per dollar value.

In the basic Q model, if the lead time doubles, the EOQ will:

 decrease by half
 double
 increase, but not double
 none of the above
 remain the same

Extra units that are held in inventory to reduce stockouts are called

 reorder point.
 safety stock.
 demand variance.
 just-in-time inventory.

Policies based on ABC analysis might include investing

 the most time and effort verifying the accuracy of records for B items.
 more in inventory security for C items.
 extra care in forecasting for C items.
 more in supplier development for A items.

A system that triggers ordering on a uniform time basis is called a

 EOQ.
 fixed-quantity system.
 reorder point system.
 fixed-period system.

If both the lead time and daily demand are constant (no variation), the ROP is equal to:

 Expected demand minus safety stock.
 Safety stock
 Expected demand plus safety stock.
 Daily demand times lead time.

Most inventory models are made based on:

 Optimum influence on demand
 Cost minimization
 Profit maximization
 Minimizing setup times
 Minimizing lead time

Which one of the following statements is best?

 In a fixed interval system, the value of Q is kept the same from one cycle to another.
 A fixed interval system requires more administrative control and computer support than does a ROP sy
 A fixed interval system lends itself more to quantity discounts than does a ROP system.
 A fixed interval system requires more safety stock than a ROP system.

Fixed-order quantity models are:

 Fixed for a specified time period
 Event triggered
 Made up of a variable order size
 Time triggered

What items do students typically buy on an ROP basis?

 textbooks
 bran muffins
 gasoline for car
 computer software
 wedding gifts

Inventory record accuracy would be decreased by

 reorder points.
 cycle counting.
 increasing stockroom accessibility.
 ABC analysis.

Which of the following is NOT a type of inventory?

 raw material
 finished goods
 MRP
 work-in-process

The difference(s) between the basic EOQ model and the production order quantity model is (are) that

 the production order quantity model does not require the assumption of instantaneous delivery.
 A. the EOQ model does not require the assumption of known, constant lead time.
 the production order quantity model does not require the assumption of known, constant demand.
 there are no holding costs in the production order quantity model.

One use of inventory is

 to tightly link a firm s production with its customer s demand.
 to ensure that item cost is maximized.
 to tightly link production and distribution processes.
 to provide a hedge against inflation.

The Basic EOQ model ignores:

 Ordering costs
 B and C items
 A items
 Holding costs
 Purchasing costs

Which of the following inventory systems would be most appropriate in controlling many items ordered from the same vendor?

 Materials Requirements Planning System
 One Period Inventory Model Using Marginal Analysis
 Fixed Order Quantity System
 Fixed Time Period System

If the production rate in an economic production lot size model is very much larger than the consumption rate, the results are practically the same for economic production lot size and EOQ.

 True
 False

ABC analysis divides an organizations on-hand inventory into three classes based upon

 annual dollar volume.
 annual demand.
 the number of units on hand.
 unit price.

The two most important inventory-based questions answered by the typical inventory model are

 when to place an order and how many of an item to order.
 how many of an item to order and what is the cost of this order.
 how many of an item to order and with whom the order should be placed.
 when to place an order and what is the cost of the order.

Reorder point models are primarily used for independent demand items.

 True
 False

With the quantity-discount model, an order level might not be at a minimum point of a total cost curve.

 False
 True

A firm producing medical equipment to customer specifications is most likely using a

 make-to-stock strategy.
 make-to-order strategy.
 mass production strategy.
 assemble-to-order strategy.

For a company that manufactures most of its products as standards, more inventory should be placed

 within the plant as work-in-process.
 closer to the customer.
 equally distributed between the plants and warehouses.
 close to suppliers.

In a two-bin inventory system, the amount contained in the second bin is equal to the:

 optimum stocking level
 safety stock
 EOQ
 amount in the first bin
 ROP

Monitoring the temperature of tomatoes during shipment would best be done using:

 Bar codes.
 Universal Product Codes (UPC)
 RFID tags
 ROP
 GPS

Which one of the following statements concerning the economic order quantity (EOQ) model is TRUE?

 Uncertainty in leadtime may not exist.
 Annual holding cost, annual purchasing cost and annual delivery costs are the relevant costs in the
 Quantity discounts can occur and taken into account in the total cost calculations.
 Partial receipts are allowed.

Space considerations are not included in any of the economic ordering models.

 False
 True